What is ELSS
ELSS Refers to Equity Linked Saving Scheme type of an equity mutual fund which invests at least 80% of its total assets in equity.
- Tax Benefit up to 1.5 lakh under Section 80C
- Returns: Dividends are tax-free
- Long term Capital gain (hold a share up to 1 year) Up to 1 lakh tax-free. more than 1 lakh taxed at 10%.
- Low Lack in Period 3 Years. while PPF 15 years. FD 5 years and returns are taxable.
- Higher returns up to 18%* may double in 4 years (power of compound interest)
- FLexible investment type SIP (monthly/quarterly/weekly)
NOTE: every investment (SIP or Lumpsum) Needs to Complete 3 years maturity.
EX: You started Investing 3 years ago, 1.5 lakhs for a year now you have invested 4.5 lakh in 3 years. But Only the first investment eligible for maturity (because it’s completed 3 years locking period other SIP not).
Why ELSS Lock-in Period 3 Years?
The Lockin Period is 3 years because before budget 2019 3 years LTCG No tax (But Now LTCG 1 year with 10% Tax on above 1 lakh profit). Govt may increase lock-in period up to 5 years because of the huge demand for ELSS But Huge risk& returns too. but indirectly added LTCG 10%. *
Growth Fund: Your investment grows until you opt for redemption or withdrawal. There is a Lock in Period of 3 years.
1. Dividend Payout options: get returns every year in the form of Dividends. but GOI introduced DDI in 2018 budget
dividend distribution tax DDT at 10 %. your dividends taxed at 10% this lower than returns. this tax in tax not an investor but the company who is paying for you final resulting in lower Value.
2.Dividend Reinvestment: your dividend invested again as fresh investment.
elss vs ppf vs nps
Lock in period
Tax on returns
No tax up to 1 lakhs remaining 10%
60% lump sum withdrawal tax fee
Min investment per year
100 (only 1 time)
premature withdrawal after 7 years
after 3 years 25% in certain situations
NPS gives additional tax benefit of 5,000 under 80CCD(1B)
is NSC maturity withdrawal tax-free?
No: but you are taxed on interest on earned on that year. becuase NSC interest Accumulated and reinvested every year. this count as fresh investment claim under 80c.
if your final amount 500000 and interest earned on that is 40,000(it’s taxable)
elss maximum limit under 80c
1.5 lakhs (but overall deduction under 80C including Life insurance, children tuition fee, pff, NPS, ELSS up to 1.5 lakh exempted from tax)
More than this allowed but not claimed extra invested amount.
top 10 elss funds 2019 tax saving
1 Year Returns
3 Year Returns
5 Year Returns
Net Assets (Rs. Crore)
Axis Long Term Equity Fund
Franklin India Taxshield Fund
DSP Tax Saver Fund
Reliance Tax Saver
ICICI Pru Long Term Equity
Aditya Birla Sun Life Tax Relief ‘96
Invesco India Tax Plan
Principal Tax Savings Fund
Tata India Tax Savings
IDFC Tax Advantage
“the returns data is based on NAV of direct growth schemes as recorded on 11th April 2019 and subject to change. Assets Under Management (AUM) data as recorded on 30th September 2018.”
How elss Calculated?
Nature of investment
CAGR /Year (expected)
Why Elss Returns are low in the 1st year?
What if I stop ELSS before 3 years?
Neither you can withdraw nor you can switch funds from ELSS schemes before completion of 3 years from the date of investment.
- Each SIP or lump sum will have its own lock-in of 3 years from its date of investment
- you can not withdraw before the lock-in period at any cost at all.
- Returns taxed at 10% if more than 1 Lakh.
Can I stop my ELSS SIP?
Yes, you can, but you can withdraw after 3 years only. (NoTe every SIP as a separate investment so the lockin period applies to every SIP, not for entire). minimum SIP period is 6 months.
Canceling happens to remove biller account accounts from bank. 2nd-way login Mutual fund account website and raise a cancel request so there are no charges. but you can not withdraw until the lock-in period.